Monday, June 30, 2008

Starting my Blog on Entrepreneurs, I could’nt think of a better way of thanking Larry Page and Sergey Brin for their wonderful creation of all times which we all proudly call as Google.

I read Google Story four months back and was impressed by the inside story and how Larry and Sergey (Co-founders of Google) started their own company which has today become indispensable for all of us. With its colourful, childlike logo set against a pure white background, Google’s magical ability to produce speedy, relevant responses to queries hundreds of millions of times daily has changed the way people find information and stay abreast of the news. Million of people use it daily and have come to regard Google and internet as one.

Google has never spent a penny on advertisement yet it is able to capture and impact our mind and soul. A day without Google is a day without sunshine. To me its like a jenie, who is there to fulfill whatever I write in that white magical box at GOOGLE.com. It has answers to my dumbest questions and as a True friend, I can trust and rely on it anytime.

Google Story by David A Vise reveals the hidden secrets behind what went in the creation of Google and what challenges were faced by its founders right from its inception.

Google runs the largest computer system in the world, which is the reason behind all quality searches and providing a competitive strength to the company. To me Google is an advertising company, which generates money through highly targeted text ads that searchers click when looking for information.

On Aug 19 2004, Google went Public with an initial public offering at $85 per share. In less than a year, the stock soared to more than $ 300 per share. Blue Chip Venture capitalist firms, Yahoo, Alta Vista and many other tech companies turned down the chance to buy Google Search System for a $1 million which forced Stanford Ph D students Sergey Brin and Larry Page to drop out from college and start their own company. By the end of summer 2005, each of the founders had a net worth of more than $10 billion.

John Hennessy, a top computer scientist and now a Google board member, came to know about Google’ page ranking technique which gave good ranking search results in a flash in comparison to Alta Vista the famous search engine that time. He encouraged both of them to start their own company and work in this direction.

The soul of Google m/c is rapid innovation, where all technologists think of solving problems first rather than devising ways of making money and creating products. Google fosters on word of mouth publicity and is not involved in any marketing or advertising activities.

A living example of its simplicity is its million dollar homepage, which is free from any advertisements, just to provide a unique searching experience to its users, which in turn, become its best advocates.

Eric Schmidt, CEO of the company looks after business affairs where as Brin and Page operate in a hands on manner pushing hard on introducing new features and offerings.

Google has the best brains working for it with a state of the art work environment. All employees are encouraged to involve in exploring ideas which interest them most apart from regular work.

Today “to Google” means “to search” which has become a verb in English, German and other languages. In just 9 years, Google has become one of the most profitable company of all times sharing platform with giants like Microsoft, Yahoo. The company as well as its founders are young with many more milestones to achieve in future.

Google got its name from a mathematical term spelled as goo-gol which means a number 1 followed by 100 zeroes. Google earns through searches that happen through advertising. In the long run, a combination of scientific, mathematical and computer skills will be the key to success in future.

Sunday, June 29, 2008

Wooing a smart employee away from a large company to join your startup can be tough, challenging but rewarding. This is how you should go about it.

In the early 80s, Steve Jobs asked John Sculley, the then president of PepsiCo, whether he wanted to continue selling sugared water all his life or change the world. Jobs was looking for a man to run his little computer company. He saw a man with the skill set needed to market his dream and he went all out to get him bite the Apple. All big companies are full of people who are firmly ensconced in fancy positions but are thirsty for a bigger challenge. The extreme comfort at the top of the corporate ladder can sometimes be suffocating to entrepreneurial people. They are looking for one chance, one compelling argument and one opportunity to create something from the ground up and they’ll quit their jobs.

On the other side, is the startup business that has a wonderful idea that is beginning to work. Now is the time to scale up and manage growth. It needs top-notch managers who will own the company’s fate and show enough dedication to stay with it irrespective of the modest initial benefits.

Put the two together and a success story unveils itself. But a startup has to be careful not to bite what it can’t chew. Done carefully, the hiring can be rewarding to both sides. The very first precaution, of course, is not to choose the wrong guy. An unfit candidate who can’t adjust to a startup environment can actually prove downright fatal for the small company. A venture capitalist, who did not wish to be named, drew from his experience and said, “We once hired a highly qualified and extremely focused CIO for one of our companies. In fact, he was so focused that he was a bad team player. He would end up working alone a lot. A lot of people started quitting because they just couldn’t work in that environment. And they would tell us, during the exit interview, very candidly that it was the CIO’s fault. So not only do you have a senior person who is not performing, but you also have performers who stop performing.”

Sanjay Anandaram, a founding member of Jumpstartup and adjunct professor at INSEAD, Singapore, points out that there are certain attributes needed for any position — team spirit, integrity and relevant skill sets. However, a small company identifying a candidate in a large company must check if the person has the self-confidence to give up the comforts of the large organisation. S/he also must cherish the operational freedom the small organisation allows and s/he has to be able to make do with less as the smaller organisation will have a lot less resources at their disposal.

A person who recently made the move from handling a large-scale operation to a company with revenues a tenth its size, is Manoj Dawane, the current CEO of Mauj. Until earlier this year, he was handling Bharti‘s telecom operations in western Uttar Pradesh and Uttaranchal. In that region, over 2,000 people reported to him in some way or the other, while in Mauj, the number tightens to a mere 150. He says, “The biggest comfort that you leave behind in a large well-oiled company is the systems that are in place. Here the systems need to be created.” The comforts of the club privileges that his former employer provided were also left behind.

He says he gave these up for a fresh dose of adrenaline that can come only from growing a small company. He got his first fix of this earlier this decade when he ran a company called Net Decisions. He adds, “Even if it is a general managerial role with a large breadth of operations, in a large organisation you are put into a matrix-like structure.” He says that with a company like this, he gets to run a business end-to-end.

Given that the smaller company would have far fewer people than the previous employer, the candidate needs to ready take on jobs that one performed at the beginning of the career. As s/he grew within the organisation, s/he will have to take on work that got delegated to juniors. “It is important that the candidate fits into the ‘execution’ mindset as opposed to the ‘managerial’ mindset. They now have to take on a contributor role more than the managerial role,” says Manik Arora, managing director of IDG Ventures India.

This means that the candidate needs to be ready to work the 15 hours a day that they did when they started out, as that is the attention a start-up needs. Considering the high stress-levels of the start-up, very few who have crossed age 40 take it up. VCs and entrepreneurs say that the ideal age for a potential core team member is from their late 20s to their mid 30s. “Sometimes we do hire people with over 20 years of work experience. In this case we need to see if they are okay with reporting to a CEO who is younger than them,” says Alok Mittal, managing director of Canaan Partners. In the 40s, the average Indian usually has a family to tend to and is coasting in their careers. There is a need for stability at this point of their lives.

“Sometimes we find a senior person who has nothing to lose as they are in a secure place,” says Rahul Khanna of Clearstone Ventures, adding, “This person is in such a high position that they simply have to oversee the operations. They are not really doing much. These people want to make a difference. For instance, the rush of going from 0 to 40 million users of a cellular operator is high. The rush of taking it from 50 million to 100 million is far less. There are people that you can tip over, but they need to be near that tipping point themselves. It is difficult to approach a person who is in the thick of a battle and woo them out of that.”

People who have always been steeped in a large organisation as an employee are highly unlikely to leave their current set up for a start-up. These sort of people are also lower down on the preference list of VCs and headhunters. “In my experience, we look for people who have worked in large as well as small companies. It is preferred if they have been part of a start-up before. If they’ve come from a large company it needn’t have been a start-up, but they should have been part of growing the company significantly,” says Mr Mittal.

Increasingly venture capitalists want to see the potential candidates show their belief in the venture. “One way to test if a person is in line with the vision of the company is to give them equity and have them settle for a lower salary. It is a signal that the person is interested with the long-term success of the company,” says Mr Arora. When a candidate is willing to do this, it is almost a sure shot that he believes his role growing the company, can pay him back greater than a salary could afford.

Mr Khanna says: “The DNA we are looking for is someone who understands the trade-off between cash and a stake.” These sort of people see money as a derivative of their work, and not the other way around says Mr Anandaram.

Seeking out these sort of people can be done through referrals, head hunters, or through ones own phone book. Mr Khanna cautions that many times startups move so fast that “people hastily pull people out of their network of contacts. That’s one way of going about it. The other way, which I feel is the better option, is to write out a detailed job description and look for the person accordingly.” The ideal option is to get someone who has worked with the current team before.

Article Resource:

Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

Saturday, June 28, 2008

There is hardly any urban youngster who doesn't blog these days. Infact, there are many who make money from blogs by selling information or advertisement space. But 22 year old Rajiv Dhingra went a step further and built a business model around corporate blogging and social networking.

When Vijay Mallya launched Force India, he also started a social Networking site called Club Force along with it. He wanted to build a community of team fans, who will loyally discuss all the happenings relevant to Force India. His executives hired Mr Dhingra's small firm WAT Consult, to do the job.

The challenge thrown at him was that in a market dominated by ORKUT and Facebook, why would anyone want to join yet another network to discuss something so niche? How could club force create enough buzz to be noted in this multitude?

Mr Dhingra's seven member team huddled in their two room office and brainstormed. Eventually, they came up with a plan. They figured that it would be easier to build a community on a popular social networking site like Facebook. Once a critical mass of, say, 1000 users were built, it would be feasible to migrate the group to club Force, provided there is a strong value proposition in that. Armed with this strategy, WAT has built 'The Force - Force india F1' group on facebook. At present, the group has 962 members.

Within weeks, the second part of the plan will be implemented. WAT is a company that believes youth understand youth best. All teams members are about 20 or 21. Each grown up using internet and took to blogging like fish to swimming. " We are young ourselves and I understand what an 18, 19 or 21 year old wants and does. I feel the impact on the youth myself. We also understand the platforms that these people are interacting on. We appreciate what the technology brings to the youth and the consumer. A 35-40 year old brand manager may not see this value. This is where we position ourselves," says Mr Dhingra.

And the strategy worked. A top internet portal, conscious of its youthful following, gave Mr Dhingra his first order a yaer ago, based just on a presentation. The next day, he hired his first employee and gave wings to his business dream. or about six months before that, he had run Watblog, dedicated to Web 2.0 trends and WAT was only a natural progression.

Using the know-how of the latest in internet technology and knowledge of the user group, WAT Consult has also guided the marketing efforts of companies like HSBC, NOKIA and Frito Lay. Setting up corporate blogs is a large part of what WAT Consult does, and Mahindra & Mahindra is one of its most prominent clients.

"Social media optimisation and corporate blogging market is a nascent market with a huge space to grow. The presence of corporate blog or on other blogs is like non-paid publicity. They are not paying for advertising or PR and it is therefore non-paid. We are capitalising on telling a corporate how to use this," he says.

The parent brand is WAT Media and has a range of services for free: WAT blog, WAT Show (video) and now WAT Cast (podcast). All these services depend on the consulting business for support. The company had a starting year revenue of Rs 22 lakh in 2007. Except for borrowing office space from the flat owned by Mr Dhingra' father, it has been completely self-funded.

"Five to ten years from now, we expexct the internet to be prime medium and we aim to be the thought leaders in this space. We know this will be a challenge as the generation which grows up with this meduim is likely to see the gaps in it before his seniors"Mr Dhingra says. "As a 27 year old then, the 20 year old will be the challenge.

Resources:The author of this article is the cheif editor in the Economic Times and the article appeared in one of their successful columns called "Starship Enterprise".

Friday, June 27, 2008

After getting a Masters degree from abroad in computer science and business administration, I was working in a technical role with a large financial company in the United States. But two years ago, I came back to India with the intention of starting my own business in the information technology/business process outsourcing sector. My initial efforts were not successful and now, after a hiatus, I am making another attempt, this time to start an online marketing company. I need advice on how to go about it.

When I came back to the country and emailed US companies to explore outsourcing opportunities, the responses were not encouraging. Sometimes, there was no response at all. I realised that nobody would outsource to me unless I have some reputation, solid experience, infrastructure and backing to carry out the work.

Soon, I got absorbed in my family business and the idea of an outsourcing startup took a back seat.Over time, however, I developed a keen interest in and some knowledge about online marketing. Now,I am in the process of setting up my own business. By this time,I know that building a customer base is going to be a challenge,especially given that I have to compete with much bigger and stronger rivals.

I want to know the correct strategy I must adopt to build an online marketing firm from scratch. Do I need to change my approach or attitude in order to be successful in this business? Or, are my concerns just the fears that any entrepreneur might have? I would appreciate your guidance.Dear Mentee,

I hope you allow me to refer to you as such. First, let me congratulate you on contemplating going down the “entrepreneurial” path not once but twice while you are still young (my assumption). After that, in the absence of more detailed information on exactly what you did on your first attempt and have done on your second, I must tell you that you are asking me to do all the heavy lifting. Some of my colleagues in Silicon Valley, faced with such a general and broad question, would have terminated the mentoring session . While normally a little more forgiving, I too believe that a mentor’s role is to provide feedback on the DEEP RESEARCH and VALIDATION the mentee himself/herself has conducted and to provide at most a single spark which ignites all that passion and hard work. Here, I feel I am being asked to do it all. If I am wrong and you do in fact have done a lot of homework, my apologies.

So, I am going to ask you a series of questions (which are not exhaustive) and invite you to consider them and what your responses to them would be. I will even offer through the editors of this column to personally meet with you after you have these responses. In framing these questions, I hope also to give you some pointers on strategy, attitude, approach and customer acquisition all issues you have raised in your general enquiry. So here goes.

What were your learnings from your first attempt in being an entrepreneur? Why did the US companies not respond to you? You have already indicated that you lacked solid experience, reputation, infrastructure and backing (financial or otherwise) at that time. Are all of those not present now? What have you done to cover your bases on these?

What value proposition are you going to bring to potential customers which is different from others, many you suggest being large and strong players. Are you going to be faster, better, cheaper? Online marketing is a huge space. Have you identified the sweet spots for you — vertical or solution or service? How and why? Have you actually talked to potential customers to establish their needs?

You say you have developed a keen interest in and “some” knowledge of online marketing. Normally that is not enough. The usual words one looks for are “passion” and “deep” knowledge in you and the people you have got on board as part of your founding team, advisers etc. Have you identified such a team who will present a credible alternative to a potential customer? If so, how are you going to incentivise them to stay with you and build the organisation? Does your philosophy of entrepreneurship include the sharing of the wealth which is created if you are successful?

How do you intend going to market? Normally building a solution or service is the easy part. Selling it is tough. How do you intend to reach your potential customers? Have you identified partners, channels who already are serving your potential customers? What do you bring to the table for such partners/channels?

There are many other questions which I could ask or give feedback on if I had more information on the work you have already done. So my response may be slightly shorter but my offer to meet with you when you have the responses remains open.

So I finish as I started. You seem to have the entrepreneurial bug. That’s great. But there is a lot of hard work ahead. How much you have already done will not reduce the amount yet to do. Figure that out. Best of luck.

SRIDAR IYENGAR Partner, Bessemer Venture Partners

Resource:This article appeared in the Economic Times in one of their successful columns called "Starship Enterprise" dated Sept 7th 2007.

Wednesday, June 25, 2008

FROM a small operation run from the terrace of his house to getting luxury brand Louis Vuitton (LV) as an investor, it has been a long journey for Dilip Kapur and his leather accessories firm Hidesign. There have been a few changes along the way — more factories, more outlets, more countries but the underlying philosophy has been the same — emphasis on design, utility and craftsmanship, and most importantly, keeping it natural. It was this philosophy that won the luxury brand over to Hidesign. Dilip Kapur, founder and president of Hidesign, talks about the company’s journey, the LV investment and the road ahead.

How did the LV investment happen? Were there other contenders for the investment?

We did not approach LV. They came to us. They were looking for global sourcing locations and as part of it they were evaluating multiple countries — China, India, Vietnam. The French embassy had recommended visiting our factory in Pondicherry. They liked what they saw — our approach to work was very similar to theirs. Our focus is on leather craftsmanship not mass manufacturing. Also, we don’t use anything artificial in our products — for instance, we don't paint or emboss even if it means giving it a neater finish.

What does the investment mean for Hidesign? Will you also make bags for LV?

No. We are very clear that we will sell only under our brand. We are not interested in being an outsourcer to LV or any other brand. Will help each other but we will maintain our separate identities. We are helping LV to set up a factory in Pondicherry that is coming up adjacent to one we are setting up. In return, we will learn from the 150 years of experience LV has in leather. Their technology, systems and technical expertise are far superior to any other player.

Were there other offers for investing in Hidesign?

Yes, there were many. But we were not interested. They could not have added much value to what we were doing. LV, on the other hand, brings 150 years of experience in working with leather. So, we immediately said yes. We have a lot to learn from them.

DILIP KAPUR Founder & President , Hidesign

What is your current capacity? What was your turnover and profits for FY07?

We have two factories in Pondicherry and one tannery in Chennai. A third factory — the one I spoke about — is coming up on 30 acres of land. Our current capacity is about 25,000 bags, 30,000 wallets and 3,000 leather jackets a month. The FY07 turnover was around Rs 100 crore with a net profit of Rs 12 crore. We have been profitable from the first year of our operations.

Was there anything else that you did differently that worked in your favour in the LV investment? For instance, you started retailing over seas before you started in India. Was that a strategic decision?

Not really. It just happened. At the time we started, our product was a very rebel, alternative lifestyle kind of product. The other products in the market were well-finished, sleek. Ours was rough and vegetable tanned. This type of product is mainstream now but back then there was no market for it in India. Those who started retailing it London, San Francisco, Melbourne were also cultural rebels. We opened our first store in India in Bangalore in 2000. By then, India had opened up, there were more women professionals — things were changing. We now have 38 stores in India and 15 overseas that we own ourselves overseas.

The Hidesign logo, how did that come about? Did you hire a professional firm for your branding strategy?

The logo was designed by a friend. Again, it wasn’t like we hired a professional firm for it. The only thing that we’ve focused on consciously is quality. We have a lot of integrity and we recognise customers are not dumb. In fact, till recently, we didn’t even have CFO or CEO. We hired a CFO three years ago, a CEO two years ago and a COO this year. The business was proprietorship. We are only now incorporating Hidesign Design Pvt Ltd because of the LV investment.

I started the business with Rs 25,000 from my personal savings. I really didn’t think of it as a business at that time. It was more a hobby run from the terrace of my house. Then we moved to a bigger house, then four houses, we kept expanding. We set up our first factory only in 1990.

Where do you see yourself in the future?

We will venture into other related accessories. It could be, say, something to do with paper, like a small pad. Or textile. But our focus will always be ‘natural’. More immediately, we are working re-designing the interiors of our stores. From cream and dark brown that are very masculine colours they will become blue and white. We will also expand overseas, have more of our own stores. In a few years, the plan is to take our exclusive stores from 15 to 60-100.

Resources:Author: N Shivapriya is the cheif editor in the Economic Times and the article appeared in one of their successful columns called "Starship Enterprise" in the edition on 7th Sept 2007.

Monday, June 23, 2008

William Wrigley Jr. came to Chicago from Philadelphia in the spring of 1891. He was 29 years old, had $32 in his pocket and unlimited enthusiasm and energy. He also had great talent as a salesman.

His father was a soap manufacturer, and at the start of his new business in Chicago, Mr. Wrigley sold Wrigley's Scouring Soap. As an extra incentive to merchants, Mr. Wrigley offered premiums. He knew his customers would be more likely to carry Wrigley's soap if they received a little "something for nothing." One of these premiums was baking powder. When baking powder proved to be more popular than soap, he switched to the baking powder business.

Then one day in 1892, Mr. Wrigley got the idea of offering two packages of chewing gum with each can of baking powder. The offer was a big success. Once again the premium - chewing gum - seemed more promising than the product it was supposed to promote.

At that time, there were at least a dozen chewing gum companies in the United States, but the industry was relatively undeveloped. Mr. Wrigley decided that chewing gum was the product with the potential he had been looking for, so he began marketing it under his own name. His first two brands were Lotta and Vassar. Juicy Fruit gum came next in 1893, and Wrigley's Spearmint was introduced later that same year.

Getting a foothold in the chewing gum business was not easy. Several times the young company was on the verge of going under, but hard work overcame the difficulties, and the business forged ahead.

In the very early days, William Wrigley Jr. personally did much of the selling to the trade. He had a gift for seeing his customers' point of view and accommodating himself to their needs. As the company grew, Mr. Wrigley showed an unusual knack for inspiring enthusiasm in the people who worked with him.

Mr. Wrigley was also one of the pioneers in the use of advertising to promote the sale of branded merchandise. He saw that consumer acceptance of Wrigley's gum could be built faster by telling people about the benefits of the product through newspaper and magazine ads, outdoor posters and other forms of advertising. Then, as more and more consumers began to ask for and buy Wrigley's chewing gum in the stores, the storekeeper would naturally want to keep a sufficient stock of Wrigley brands on hand.

As the company continued to grow, it steadfastly applied this basic principle: "Even in a little thing like a stick of gum, quality is important."

The Spirit of Innovation

Wrigley associates are proud to be a part of the Wrigley Company, and are dedicated to its long-term success. Every associate is expected to operate under the Company's shared values and rely on these values to guide their behavior with each other, and the customers and communities of the Wrigley Company. These values form the foundation for the way we conduct our business - the Wrigley Way.

They treat each other with trust, dignity and respect.

They create an environment where people from diverse cultures and backgrounds work together effectively.

They support and have the courage to take measured risk.

They act with a sense of urgency without sacrificing excellence.

They foster a spirit of innovation in all areas of our business.

They strive for effective communication that results in teamwork, shared knowledge and ideas.

They make an extraordinary effort to attract, identify, recruit and retain the very best person for every job.

Friday, June 13, 2008

MICROFINANCE is on the lips of every banker in India today. Private equity and venture capital investor have also taken a fancy for this growing sector that seeks to tap the credit and other financial needs of the country’s poor and unserved populations. This has given a rare opportunity to entrepreneurs to bring together social work and capital-led business professionalism. Intellectual Capital Advisory, or Intellecap as it better known, is a five-year-old firm that taps this niche, helping microfinance institutions (MFI) and similar groups scale up and make the investment grade.

Active since 2004, Intellecap has worked with around 30 organisations, assisting them with their business plans, helping them structure innovative debt instruments and also facilitating private equity investments. It acted as advisor to Legatum in the $25 million investment into ShareFin, one of the largest investments in an MFI in India.

“It’s not hard to figure why so many funds are flocking to MFIs. There are 8 crore families below the poverty line and even if each family takes a Rs 5,000 loan, it is a huge market,” says Vineet Rai, co-founder. Rai started the venture with his wife, Swati Rai, and two other friends, Pawan Mehra and Upendra Bhatt.

Rai and Mehra met at IIM-A where Pawan was a student. Rai was the CEO of Gyan, an incubation fund for rural innovation set up by IIMA and the Gujarat government. The two of them, along with Bhatt, a friend of Pawan’s, put together their savings and started the institution.

It is hard to pinpoint Intellecap’s precise line of business because like the firms it advises, it was not set up with the motive for huge profits. It was set up to bridge the gap between the entrepreneurs and investors, provide consultancy services and support to for-profit social enterprises along the lines of what their mainstream corporate counterparts could access, and knowledge advisory in the form of an MFI gateway it manages for the World Bank. The nature of the companies it advises also makes it difficult for Intellecap to earn substantial revenues from a single client or transaction, unless it has a diverse revenue mix.

In 2004, nearly all its revenues came from knowledge advisory and the MFI portal it built and still manages. In 2005, however, revenues from consulting services also kicked in and it was its largest business. In the last two years, in addition to these revenue streams it also got revenues from helping MFIs structure innovative debt instruments and advising on investment transactions such as the Legatum-Sharefin deal.

Social investment banking is a growing business and Intellecap is currently in talks with six organisations on the sell side and has working relationships with 10 entities on the buy side. As Intellecap grows and with the huge interest in the microfinance sector, this could soon turn out to be its largest business in the coming years.

“There is a complete dichotomy between the entrepreneurs of some of these socially-focused ventures and the investors who fund them. The entrepreneurs are talking about the poor and the investors are talking term sheet and drag along clauses — there is a fear psychosis when you talk about financing,” says about the need for such an advisory service.

Earlier this month, Intellecap itself got an $8.4 million investment from Legatum. It intends to use these funds to expand globally with centres in Amsterdam, London and Africa. “Amsterdam and London is where the money supply is and places like Africa and Asia is where this money is needed the most,” says Rai. Currently, Intellecap’s operations are spread between Hyderabad, which is emerging as the MFI hub of the country, and Mumbai. “Our entire team is below 30. I’m oldest person around,” says Vineet, all of 35.

What is Micro Financing?

Microfinance refers to the provision of financial services to low-income clients, including the self-employed. The term also refers to the practice of sustainably delivering those services. More broadly, it refers to a movement that envisions “a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers".

About Intellecap:

Intellecap is focused on the multiple bottom-line investment industry. As such, they offer services to various players within this space including investors, enterprises, entrepreneurs, multi-lateral development agencies, policy makers, and many others.

In order to intelligently allocate capital, they provide these diverse players with individualized services that range from investment banking, enterprise development, research, and trainings, to knowledge management and thought leading publications to develop the multiple bottom-line industry as a whole.

Working in both indirect strategic advisory roles and direct design and execution, Intellecap leverages its understanding of mainstream, profit-oriented business models to create unique solutions that create multiple bottom-line returns.

Article Resources:Author: N Shivapriya is the cheif editor in the Economic Times and the article appeared in one of their successful columns called "Starship Enterprise". For more information on Intellecap log on Successful Entrepreneur: Micro Financing

Thursday, June 12, 2008

Mergers and acquisitions are all the rage in corporate India. But are such deals good only for the big boys or can startups and small companies too take the plunge?

Education and training firm Career Launcher made its first acquisition in the seventh year of its existence. For a small company that had begun with one offering, the buyout brought diversification, de-risked revenues and overseas customers. In the six years after that, the firm has made three more acquisitions, the latest one in the United States. IIM-Calcutta alumnus R Satya Narayanan, who founded Career Launcher, says acquisitions are a key driver of growth for the company.

He, and other successful small companies, have demonstrated that mergers and acquisitions are not just for the Tatas and Birlas. Even startups, not just those who have already tasted success but even the greenhorns, can buy and manage the integration of outside businesses. But, M&A deals are a risky affair with low potential for success even in the case of multi-billion dollar companies and why should startups venture into them? And if one must, how and when does an entrepreneur decide to go in for acquisition?

IT CAN GET YOU STARTED

When pharmaceutical industry employee K Hari Babu was considering starting on his own in the mid-1990s, he noticed a number of sick drug units in Hyderabad city. Far from discouraging him from his entrepreneurial aspirations, the sorry state of these units only made him sense a rare opportunity. He could spend the time, money and effort to build his own drug factory or buy one of those units cheap and start from day one. He took the latter option and more than a decade later, his venture, Anu Laboratories, has blossomed into a profitable company with Rs 200 crore in annual revenues and exporting to some of the world’s best known drug makers.

But then, why did he choose to acquire to start? “When you are walking on the road and need a car, you don’t sit and build one yourself. You just hire a cab and take the best way out,” says Mr Haribabu. He points out that pharmaceutical industry is one of those sectors that involve a lengthy regulatory approval process for a greenfield project. An acquisition in such industry can make the entry quick and trouble-free.

Laura Parkins, executive director of National Entrepreneurship Network, lists hotels and high-end financial analytics businesses as attractive for early acquisitions by startups. It is difficult to get the land and approvals to build hotels and restaurants and it is easier to buy out. “It is difficult to find skilled people. Hence acquisition is best here and you inherit an already set HR base,” she says.

IT CAN GIVE YOU SCALE

Education service businesses typically start in one city with one offering. Some coach candidates for civil service exams, other train them for MBA entrance tests and still others for courses abroad. Most of these centres remain that way, but those who grow do so by setting up their presence in several cities and expanding the range of training they provide. To achieve scale and breadth, acquisitions can come in handy. On the other hand, setting up coaching centres in each city and letting them grow on their own could be a time-consuming process.

“When you are in your growth stage... when you are near 80% capacity utilisation, that should be the time you start giving acquisitions a serious thought,” Mr Hari Babu says. So many small companies grow up to a point and fail to grow further. They can choose to remain that way — a mom and pop shop — or they can break that barrier with an acquisition.

HAVE CASH, WILL BUY

Whether rookie entrepreneur or a growing company, startup acquisitions have to be made with own cash, typically. In India, banks are not allowed to lend to domestic M&A deals, going by the socialist principle that it is their job to lend for asset creation not transfer. While they lend vigorously for cross-border acquisition deals by large companies, lenders vanish before the word loan can be uttered when it comes to acquisition by an entrepreneur. Giving away stock to the owners of the business being bought can be considered, but it can dilute the startup founder’s control. So, pumping in hard cash is really the hassle-free way to acquire. If there is not much money in hand, going for acquisitions would be one hell-of-a-risk any way.

Small company heads and first generation entrepreneurs don’t have experience in the foggy world of corporate valuations and risk paying too much for a target business, says a Mumbai-based investment banker. For this and other reasons, they must rope in professional help to decide an acquisition strategy and specific deals. One thumb rule, in all cases, is the cashflows of the acquired company should be able to finance the buyout cost over time, a banker said.

BUY AND KEEP TALENT

For a small company, domain knowledge and leadership skills are the biggest assets. In any acquisition, employees of the acquired firm can lose morale and look to change jobs. In a startup scenario, the feeling of uncertainty is even more intense. An acquisition would be meaningless if the target firm’s key personnel were to leave within a few days. So, the acquirer must find ways to bind the best workers to the company at least for some time.

Take the case of Globsyn Technologies, which acquired the promoter stake in Mumbai-based Synergy Log-in Systems. Globsyn was a small firm in education and training and the buyout brought it banking software expertise. It made strategic sense and all looked rosy. But soon after the acquisition, two senior overseas employees left the company taking their contracts with them. “I had to start building the company again from scratch,” recollects Globsyn chairman Bikram Dasgupta. “Some of the existing customers were also very upset with the firm and were thinking of taking their contracts elsewhere. The business had been neglected and nobody was servicing them. I had to convince them to stay on,” he said. Today, Synergy has survived and is making profits, but it has not been an easy bite to chew for Dasgupta.

IT’S A TWO-WAY STREET

Just like it can make sense for some companies to acquire, it could be good for others to be acquired. Smart entrepreneurs don’t cling to their pet startups that can flourish better under somebody else’s care. They sell out and look for alternatives.

“Acquisitions are more about the mindset, and entrepreneurs have to be open to the idea of M&As being bi-direction if they are thinking abut achieving scale through this means,” Manak Singh, executive director at The Indus Entrepreneurs, says.

Buying or selling, a transaction has to fit in with the strategy and vision of the business. Cultural integration is an issue even in small groups of people. Most acquisitions fail because two different sets of employees don’t see eye to eye on what they want to achieve together. For a large company, a failed acquisition may be a mere headache, but for a startup, it will be cancer. So, unless the small business leader is absolutely confident of the strategic purpose and the firm’s ability to digest a buyout, the effort to acquire should not be made. There are always options such as strategic alliances to achieve some of the growth needs, experts say.

The success story of the world’s largest software company, Microsoft Corporation, started really with the acquisition of DOS, the Disk Operating System, in 1981 for a mere $50,000. Though the company paid Seattle Computer Products another $1 million later to settle a dispute, the whole thing was a jolly good investment for the company. Who knows, the next killer acquisition may be yours and the opportunity may just be round the corner.

Article Resource:Author: Ritwik Donde (With inputs from N Shivapriya) is the cheif editor in the Economic Times and the article appeared in one of their successful columns in "Start-ups".

Mergers and Acquisitions

The phrase mergers and acquisitions (abbreviated M&A) refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.

Distinction between Mergers and Acquisitions

Although they are often uttered in the same breath and used as though they were synonymous, the terms merger and acquisition mean slightly different things.

When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the business and the buyer's stock continues to be traded.In the pure sense of the term, a merger happens when two firms, often of about the same size, agree to go forward as a single new company rather than remain separately owned and operated. This kind of action is more precisely referred to as a "merger of equals". Both companies' stocks are surrendered and new company stock is issued in its place.

In practice, however, actual mergers of equals don't happen very often. Usually, one company will buy another and, as part of the deal's terms, simply allow the acquired firm to proclaim that the action is a merger of equals, even if it is technically an acquisition. Being bought out often carries negative connotations, therefore, by describing the deal as a merger, deal makers and top managers try to make the takeover more palatable.

Wednesday, June 11, 2008

TO EVEN those with a strong urge to start their own business, it seems ludicrous to give up a job in a comfortable atmosphere, with full benefits and generous bonuses. The fact is, it’s still a job — and you still wonder, every day, what it’d be like to work for yourself, not someone else. The following are the five common mental hurdles you must leap over to realise your dream.

You don’t have a lot of money in the bank

That’s a very good reason to shy away from quitting your job, isn’t it? But that just means you need to get a financial plan together. Consult with a financial planner who can help you map out personal and business finance goals. Some local colleges and community centres even offer workshops and classes on financial planning, usually at a minimal cost, so take advantage of them.

Someone mentions the words “business plan” to you, and you stare blankly

A business plan is not the be-all, end-all of starting a business. But it’s pretty important. Some think they don’t need a business plan if they aren’t planning on seeking financing from outside sources. But even if no one but you ever sees your business plan, it’s still important. It helps you put your goals in focus and create a written plan of action for your business. It’s almost like a detailed to-do list. Plus, you never know where your business will take you. You might get started and find out you need more money than you thought, and that’s where that handy business plan comes in.

You don’t know anything about bookkeeping

Go ahead and admit it—it’s very freeing. Admitting you don’t know everything will only make you successful later, because it means you’ll have the courage to ask for help. Get all the advice and mentoring you can at this stage. There’s no shame in consulting with an accountant, an attorney, a long-time veteran in the field, and so on.

You’re not sure you have the dedication it takes to stick with it

There’s a simple way to solve this problem: Don’t start a business doing something you don’t like. If you hate getting up early, starting a coffee shop or a bakery is not for you. If you get impatient around children, don’t start a child-care centre or anything else kid-related. You have to love what you’re doing when you start a business, or you will not stick with it. It's no different than working in a job you hate.

You’re afraid of selling

That’s a big one, because if you’re an entrepreneur, you’re also a salesperson—that is, unless you figure out a way to bring a top-notch salesperson onto your team from the get-go. Chances are, you don’t have the money for that yet, so perhaps a better alternative is to psych yourself up to sell. If you believe in your product or service, you’ll find the confidence to sell it.

Tuesday, June 10, 2008

The story of a team of five youngsters who sensed an opportunity before others and built one of the largest independent studios in the country

FOR A while it seemed like the design revolution was going to pass India. With a retail boom well and truly on, it was only natural that there would be a ripple effect in product and display design, but many retailers chose to go overseas for store design and display. Shark Design is one of those companies that had sniffed the opportunity five years ago and lapped it up. Its founders seem to have got a headstart over a host of advertising agencies that are beginning to get interested in design.

The design firm, run by five thirty-somethings, has been at the forefront of the retail store design business in the last five years.

Their work is there to see at practically every retail store — Pantaloon, Etam, Reebok, Samsung and the Worldspace lounges, to name but a few. And it’s not just the store design for these retailers, the actual point-of purchase displays and other retail knickknacks have all been designed and manufactured by Shark Design. While the company asserts its presence also in 3D modelling and animation, it would be no exaggeration to say that nearly all its revenues come from retail design and manufacturing.

How did it all come about? In 2002, three friends, Ashish Jain, Manish Jain and Avnish Jain kicked steady day-jobs in some of the biggest advertising agencies of the country to start their own business. But back then, design wasn’t uppermost on their minds. The company they set up was Eventz Entertainment, which as the name suggests, was an event management company. It was only next year that Eventz Entertainment morphed into Shark Design, and Avnish was the brains behind the design. Today, just about four years later, Shark Design is one of the largest independent design studios in the country, and one of the few that have a fully equipped manufacturing facility as well. The design firm clocked a turnover of Rs 30 crore in FY07. It had already broken even after three years of operation in FY06. Interestingly, the design house ran entirely on its own steam out of a small office in Delhi. There were no bank loans, and no borrowings from family etc.

Amit Ajwani, one of the five partners who joined the organisation just after it was set up, describes the defining moment for the company. He says: “It was a Samsung event that we were working on. We were asked by them to create a display unit for an event and that was the beginning.” Mr Ajwani was an old JWT hand and had studied together with one of the co-founders, in Indore. He quit JWT about three years ago, where he was servicing a bulk of the Unilever businesses to take charge of the Mumbai branch of Shark Design. Ajay Naqvi, formerly of Ogilvy & Mather — and the man with the baritone voice behind “kuch log Sumo chalate hai” — came on board around the same time.

The advertising background of the founding partners has been a great influence in shaping the agency. Says Mr Ajwani: “We spend a lot of time on shop floors trying to understand consumer behaviour and we see how we can translate these learnings into our design and manufacturing.” That surely must have impressed Kishore Biyani, the Future Group head honcho. Mr Biyani recounts spending hours on the shop floor in his book, and he’s given most of the new retail business to Shark Design even though Future Group has an in-house design firm called Idiom. A lot of emphasis has also been spent on market research and understanding what clients want. Besides the Future Group, for whom Shark handles Pantaloon, Etam and aLL stores, the other big clients include Samsung and Worldspace.

Mr Ajwani and the others are too concerned about the imminent entry of foreign design houses. Fitch Design, one of the leading retail design firms worldwide, has just made a big-bang entry into India by bagging the AV Birla Retail account and designing their ‘more.’ stores. Most of the domestic work would still go to Indian design firms since the account size would be too small for someone like Fitch.

Second, Shark’s manufacturing facilities allow them to work on design execution instead of actual design and it has already worked with Fitch on a few designs that the latter has created. The company also says it is cheaper than any of the big design houses, with Mr Ajwani reckoning that it charges barely a sixth of what a big design house like Fitch would charge.

Of course, the five don’t want to rest on their laurels. Mr Ajwani has clearly stated that the company aims to top Rs 100 crore by 2010, which means that it has to grow at 100% every year for the next three years. Unless the organised retail industry is completely thrown off the rails by all manner of protesters, it would take a brave man to bet against this sort of growth.

Article Resources:Irshad Daftari is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Startups called "Starship Enterprise". For more information on Shark Design log on Successful Entrepreneur - Design Studios

Retail design trends for 2008.

As 2007 runs out, retail fixture manufacturers and designers have their eyes turned to 2008. What exactly will the New Year bring in terms of retail design? There are certainly bound to be surprises and wildcards (as there always are), but there are also a few emerging trends, having built momentum during recent years, that will go full steam into the upcoming year.

Green is the new “it” trend

When Wal-Mart starts doing it, you know it has to be big. Of course, I’m talking about “going green.” Reducing your negative environmental impact used to be something only the niche, nature-loving brands worked toward, but as society begins embracing the environmentally conscious state of mind, more retailers are jumping on the bandwagon to stay in tune with their target customers.

It’s more than just seeing

More and more, consumers are looking for more than just products or services when they enter a business. They are looking for an experience. With the power a great experience has on same-store sales, retailers are doing their best to create immersive environments that are a treat for more than just the eyes. Hearing, smell, taste, and touch are stepping out from sight’s shadow to create a complete sensory experience.

Monday, June 9, 2008

You have big ideas and you believe your business model is as good as it gets. But you feel something is wrong. Watch out, it may be that your teammates and employees don’t see the same big picture that you see. Learn to share your vision and values with them.

AT A POPULAR party venue just outside Delhi, about 3,000 had been asked to gather one evening four years ago. They were the employees of Daksh, a business process outsourcing firm, and they were a little perplexed. No speeches, no presentations and none of the usual gobbledygook unleashed in motivation camps. They were just being shown short clips from a range of Hollywood films: Pretty Woman, Titanic, Gone in 60 Seconds and Mighty Joe Young. What the then-CEO, Sanjeev Aggarwal, was trying to do was to communicate with his large team what he wanted from them to build the organisation.

• From Gone in 60 Seconds, he highlighted the need to set a target (steal 50 cars) and accomplish it within the allotted time (three days).

• In Pretty Woman, the clip showed Julia Roberts’ character getting ill-treated by a store keeper, but later treated with respect by the manager of a hotel. By showing this, Daksh wanted its employees to treat everyone properly, irrespective of status.

• A Titanic scene in which the music troupe keeps on playing even as the giant ship is sinking, demonstrated to the employees devotion to customer service comes first.

On that one evening, Aggarwal succeeded in communicating his vision across his company, without having to resort to motivational posters around the office. The unique experience also stayed in the minds of the employees, helping them constantly remember the lessons.

Very often, a startup puts together a team and people are attracted to it because of the excitement of being part of a startup, a bigger paycheck or even a stake. They hear what the target of the company is, but they are not sure what it stands for. While a vision is set for the company, the values need to be put into place as well.

A business leader needs to articulate the corporate vision clearly so that the organisation’s progress towards its goals can be effectively monitored and employees are empowered to take decisions on the move. “Someone once said that leadership is not about leading from the front. It’s like herding cats; you have to herd them from the back. If you are at the back then the ones in front have to know where they are heading. The paradigm where leaders assign tasks is gone. Sharing the vision helps people make decisions on the fly. They can take decisions in the appropriate direction without feeling lost about it,” says Alok Mittal, managing director of Canaan Partners.

Some like Laura Parkin, executive director of National Entrepreneurship Network, believes that a team wouldn’t even be formed without sharing the vision. “The only reason anyone would join a startup is if they see the same vision as the entrepreneur,” she says.

There are entrepreneurs who hesitate to share their vision with the rest of their startup team, worrying they may share too much and lose the idea to someone else. Some may simply be unable to articulate the long-term goals for the company. “Many entrepreneurs are poor communicators. Though they see the light, they are unable to share it,” says

Mr Aggarwal, who is now the managing director of Helion Ventures.For the tongue-tied entrepreneur, help is now available from industrial psychologists, corporate trainers and motivational speakers who can help her/him voice it. One such person is Uma Arora, the founder of Idam Learning. Quoting from her experience, she cited the case of a startup firm that had been growing slow and losing people. “After examining this company closely we realised that they all (team members) hadn’t arrived at a set of values and that their visions were purely in numeric form. They goal was to gain a certain market share, but we didn’t see any vision of what the quality of the company was. There is very often an excessive focus on numbers and not on what kind of company it should be,” she says.

“What I find among today’s entrepreneurs, and there are exceptions of course, is that when we dig deep enough, we see that their vision is simply to raise the valuation and sell it off,” she points out, continuing, “If this is the case then you have to learn to speak two languages. One for your confidantes and core team, and the other for your employees.” For the entrepreneur with the big picture dreams, the vision and values can be etched in stone. For retail chain Subhiksha, it has remained “Be the largest player in the market we operate in and give the consumer the lowest cost.”

Subhiksha is now 920 stores-strong. “Instead of sharing the vision, co-own the vision,” says R Subramanian the founder of Subhiksha. Their vision and values was set back in 1996 when the six member core team set sail.

“If you get the core team into the formulation process, then it becomes our idea and not my idea. Here the team sets the goals, the values and works backwards from there,” says Mr Aggarwal. In 2000, Daksh asked the members of the 25-member core team to make presentations on what it the values of the organisation should be. At the end of the day the funnelled it down and handed it to the human resource department to make it into posters and cards to be distributed.

Sometimes the vision and values change and entrepreneurs must be ready to face it. They can be purists and decide to stay true to their original plan. Or they could evolve with the market for higher gains. “Our initial mission statement was ‘build exceptional customer relationships by leveraging India’s high quality, cost effective intellectual capital.’ In 2000, we thought that India would be the place from where we would deploy our services. We eventually discovered we could deploy our services from Mexico and Philippines as well. So we had to modify our mission statement,” says Mr Aggarwal.

In the case of a large organisation, hitting upon the right vision could be a day-long process that involves numerous people, a clubhouse, a buffet lunch and PowerPoint presentations. For a lone entrepreneur or small team, this could happen at the coffee shop on a paper napkin. “There are a lot of personal styles involved in communicating a vision. But first of all you (the entrepreneur) have to be clear in your head. Clarity and brevity is essential. If the entrepreneur were to write down their vision, if it is longer than even a 150 words, then it is too long,” says Ms Parkin, NEN.

The vision is a mix of numerical targets, values and big picture plan. These automatically set up a monitoring system. ‘’How you do’ and ‘what you do’ is a derivative of ‘where you want to go’,” says Mr Subramanian. Ms Parkin says: “We ask people to envision what their success looks like, and then work towards that.”

Aggarwal and Subramanian had the courage to think out of the box and disseminate their vision innovatively and effectively. As a result, the companies they founded have grown beyond their peers and broke their own targets. Great companies don’t just get the big picture right, but also hang it on the wall for everyone to see.

Article Resource:

Jacob Cherian is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Startups.

Sunday, June 8, 2008

IT TAKES an entrepreneurial fire in your belly to start a business — and make it succeed — and not everyone has it. How do you know if you have what it takes to start a business? There’s really no way to know for sure. But there are things in common among the emotional and family fabric of people ready to consider an entrepreneurial venture. You don’t have to fit all seven of these categories to be a good candidate for entrepreneurship. But it probably wouldn’t hurt. In general, the more you have in common with these characteristics, the closer you probably are to being ready to try going out on your own.

1

You come from a line of people who couldn’t work for someone else. People who are successful at establishing their own business tend to have had parents who worked for themselves. It’s usually easier to get a job with a company than to start your own business; people who strike out on their own often have the direct example of a parent to look to.

2

You’re a lousy employee. No need to sugar-coat this one. People who start their own businesses tend to have been fired from or quit more than one job. It is not to say you were laid off for lack of work or transitioned from one job to a better-paying one — you were cut loose, or you quit before they could fire you. Think of it as the marketplace telling you that the only person who can effectively motivate and manage you is yourself.

3

You see more than one definition of “job security.” The very few people who’ve stayed with one employer for 25 or 30 years may look incredibly secure, but how many people do you know who are able to stay with one company for that long? In a rapidly changing economy, job security can be frighteningly fleeting. To paraphrase one business observer, “It’s way better to have 100 idiot clients than to have one idiot boss.”

4

You’ve gone as far as you can go, or you’re not going anywhere at all. Sometimes the motivation to start a new venture comes from having reached the top of the pile where you are, looking around, and saying, “What’s next?” Early success can be wonderful, but early retirement can sometimes drive energetic and motivated people totally batty. On the other hand, the drive to build something new can also come from deciding that you’re stuck in the middle instead of at the top. Fear of stagnation can be a powerful motivator, especially if you have an idea for something that could be at least more interesting and potentially more lucrative.

5

You’ve done the market research already. Don’t even talk to me about your great business idea if you haven’t put the time into figuring out if there’s a market for your product or service. As the people behind any number of failed internet ventures will tell you, “cool” doesn’t necessarily translate into “profitable.” Don’t bother building it if you haven’t figured out whether there’s a good chance the customers will come.

6

You’ve got the support of your family. Starting a business is stressful under the best of circumstances. Trying to do it without the support of your spouse or other significant family members or friends would probably be unbearable.

7

You know you cannot do it alone. You might excel at promoting a business. Maybe you love running the financial end of the enterprise. You could be someone who starts a business because you have unique creative or technical know-how to create a product.

Any of the above is possible, but it’s unlikely that you are going to excel at all of these tasks — or at all of the tasks involved in running any business. Forget all that “lone wolf” stuff. No matter how “go-italone” your philosophy is, you’re going to need some help sometime.

The willingness to get that help — having employees, partners or consultants for those areas in which you are not an expert — is one indicator of likely future success. As development consultant Ernesto Sirolli writes in “Ripples from the Zambezi,” “No successful entrepreneur has ever succeeded alone... The person who is most capable of enlisting the support of others is the most likely to succeed.”

Saturday, June 7, 2008

2001 was the year of the dotcom bust. That was also the year when Bangalore-based techies, KS Karthik & Anil Chhikara launched their e-learning co.

THE aftermath of the dotcom bust in 2001 was a tough time for technology entrepreneurs to start a venture as investors, customers and potential valuations suddenly vanished into thin air. So, when techies KS Karthik and Anil Chhikara came together with a startup dream, the path ahead was doubtless going to be thorny.

But, unlike other techies who put together quickrich dotcom businesses and went down with the web world collapse, the two Bangalore-based techies eyed the potential for training college graduates to be jobready for the software outsourcing industry and other sectors. In a city where giants such as Infosys and Wipro were beginning to hire vigorously, the two entrepreneurs sensed a growing need for structured corporate training.

Thus came into being 24x7 Learning with a mission to go beyond the regular definition of technology-enabled learning. “Since there are already a lot of players in the e-learning space catering to the primary and early education institutions, we decided that the focus should be on implementing our products at higher education namely colleges and universities to help them meet the corporate requirements,” says Mr Chhikara.

In six years, the company has grown to have more than 120 customers across industry segments such as information technology, retail, pharmaceuticals and hospitality. Its clients include Wipro, Satyam, Patni, Aditya Birla Group, Bharti Airtel, Ashok Leyland, Convergys, Accenture, JPMorgan and ING Vysya.

But, the ride was not smooth for the fledgling firm. “The internet bubble had just burst, there was no fresh investment coming through and the economy itself was swaying. Under difficult times, a lot of companies had announced budget cuts and the first axe came upon training costs. Thus we saw our market shrinking in our first two years itself,” Mr Karthik said.

The founders were quick to realise that success of any e-learning implementation was not about technology but about how e-learning fitted into the learning culture within any corporate organisation and how e-learning initiative was promoted internally within a company. “When we started, we had no plans to create a learning management system. We wanted to consult companies to implement a skill improvement system and then in due course may be look to acquire a product IP ourselves. But the initial hiccups forced us to come out with LearnTrac which now is our bestseller. Also, since we had not (received) venture funding during this phase, there was lesser pressure on us to do or die,” recalls Mr Karthik.

KS KARTHIK (SITTING) & ANIL CHHIKARA Founders, 24x7 Learning

So how did it survive this downturn? The company focused on innovation and invested in product development despite its low revenues. It also chose to let its business model be flexible. It thus evolved from being a consultancy to a product company.

Once it waited out the lean period, business started to pick up. Companies and educational institutions showed openness to adopt technology and implement novel ideas in training, helping 24x7 prosper. Today, the company claims to be the largest e-learning implementation provider in India and says its learners are dispersed across 25 countries. Seven out of 10 top software outsourcing companies and six out of 10 top business process outsourcing companies are its clients.

It has also made a dent into the university sector. BITS Pilani set up an e-library with 24x7 Learning’s technology, giving its students online access to hundreds of engineering and technical books.

So what lies next for this start-up? The company wants to work with state institutions to develop their distance learning programs. “What the universities have is purely raw content with them. We would look to develop the content online by using their curriculum,” says Mr Chhikara. Increasingly, state governments such as Maharashtra are realising the need for having a competent and skilled manpower to match the incoming investment. The company has already implemented its SkillBridge solution in SNDT University for nearly 1,000 students based on the institute’s own study material.

The firm hopes to close its current business year with a revenue of nearly $6 million. With research body IDC expecting the global e-learning market to touch the $28 billion mark by 2008, the company is readying itself to face global competition. “May be this competition would help us evolve further,” says Mr Karthik.

Article Resource:

Ritwik Donde is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Startups called "Starship Enterprise".

About 24x7 E Learning

Beginning as an 'eLearning' company and spreading roots as India's largest eLearning implementation company, they have grown into a company whose holistic solutions permeate to every individual in an organization, and in the process makes a difference to the nation's intellectual capital. 'Talent Lifecycle ManagementSM' is what they call it. It is a natural and enriching process that's responsive to dynamic market needs.

Thursday, June 5, 2008

Our company started in a modest way in December 2005 in Pune. We manufacture industrial valves and accessories for automation. The company was started by me and a US company as a 50:50 joint venture, with the objective of supplying our products to the US company. Our revenue for 2006-2007 was 10 crore, 90% of which was from exports. We made a loss of Rs 20 lakh.

Our revenue targets for the year to March 2008 is Rs 18 crore (Rs 12 crore in exports and the balance from domestic sales). All the current key functional heads and me have worked together in the previous company and they all decided to throw in their lot with me by joining me at the same salaries. Meanwhile, salaries in our industry has almost doubled over the last two years. I need to decide whether to hike salaries of my present team to match the industry levels.

I need your advice on how to match the current short-term goals of profits versus long-term goals of developing the company’s human resource assets. My long-term goals are to reach Rs 50 crore revenues by 2010. My salary bill was Rs 70 lakh, when revenue reached Rs 10 crore. It would rise to Rs 1.6 crore at a revenue of Rs 18 crore, if I increase salaries in line with market trends and hire more staff. Should I focus on building the team now or try to meet the short-term objective of profitability?

Wow! Yours is a successful startup! Congratulations on passing so many milestones in such a short time. You went from zero to Rs 10 crore in a little over a year and are looking to grow to Rs 18 crore in year 2 — that is spectacular growth. You are diversifying your client base from 90% exports to 66% exports and 33% domestic — that is a wise decision at a time when the US economy is showing signs of flagging! You have managed to keep your senior team together so far — and it was an important thing to do in the start-up stage because it lets you worry about the right things — your product, your markets.

One of the most important skills for a successful entrepreneur to learn is how to sift through the many questions that arise and make sure you are asking and answering the right ones. It appears that you believe the heart of the issue is whether you should focus on trying to keep/build your team or try to meet short-term profit objectives. I submit to you that this is not the right question for you to be asking at this stage of your growth, though you clearly have to address the situation you describe.

RAJAN SRIKANTH President, Asia, Mercer Human Resource Consulting

I have in this column described a “stages of growth” model for startups. Stage One is all about innovation and creating/establishing that killer product. Stage Two is all about market penetration and creating a broad footprint. Stage Three marks the graduation from a startup to a viable business and is characterised by what I call the 3Ps — professionalising, introduction of process, and profit extraction. The needs of managing a startup through each of these stages differ. The challenge is that the entrepreneur tries to manage with an approach, or operate with a organisation that may be right for one stage, when the business circumstances suggest he or she should be in another stage.

I believe your company has just entered Stage Two. You are looking to diversify your markets and gain a strong domestic footprint. The primary goal for a successful startup at this stage is to firmly establish itself in all of its target markets and create reliable and rapidly growing revenue streams. Profit, while it is nice to have, is rarely the best thing to focus on in a Stage Two company. So, I would first suggest that you take the consideration of shortterm profitability off the table — if you can afford to do so, of course. Besides, for a one-year old company to have only made a 2% loss on a turnover of Rs 10 crore suggests that you may already be running a very tight ship. The relevant question then becomes whether you are not spending enough to support your spectacular growth, and on what you could/should be spending more.

Which brings us to the second part of your question — about keeping/building your team and whether you should pay them more or risk losing them. Here too, I think the question to ask is different. The key to success in a Stage Two startup is typically building a sales culture by hiring market developers and salespersons, and getting more sophisticated in terms of measuring and rewarding sales performance. The first question I would ask then is how your current team measures up against your business need for quickly growing a domestic market for your product and possibly exploring other export markets; where there are critical gaps to fill, and where there are key players in key positions that must be retained. The second question I would then ask for each of these “must hire” or “must retain” positions/players is what it will take to attract or retain them. Our research shows that while compensation plays an important role, it rarely is the reason people either stay or leave a company. Opportunities for career advancement and development is an important driver in attracting and retaining talent. Clearly, it appears that your team moved with you from the previous company not because you gave them great raises, but because they saw a terrific opportunity for career advancement. Now, that does not mean you can continue to pay less when the competitors have doubled compensation, but it does mean that you should practice what I would call “HR for the unit of one”. What I mean by that is you should seek to understand for each of your key players — what really makes them tick, who would require an increase in salary to stay, who can be inspired to even higher levels by adding a variable pay component contingent on performance, who would pledge their loyalty in exchange for a challenging assignment in a new market/role or being given an opportunity to learn new skills, and who would become part of the solution rather than a part of the problem if you invited them into your decision making.

There are no easy answers to the situation you fa ce, but I hope I have been able to point you the right questions to ask. In seeking answers to these questions, I have no doubt you will not only lay the foundation for your continued spectacular success, but also develop a deeper understanding of what makes startups and the people who work in them really tick.

Article Resource:The article appeared in The Economic Times, Mumbai in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

K Jayaganesh's story is similar. He failed the civil service examination six times but never lost heart. The seventh time -- his last chance -- he passed with a rank of 156 and has been selected for the Indian Administrative Service.

Jayaganesh's story is inspiring not because he did not lose heart but also because he comes from a very poor background in a village in Tamil Nadu, and though he studied to be an engineer, he worked at odd jobs, even as a waiter for a short while, to realise his dream of becoming an IAS officer.

Read on for Jayaganesh's inspiring achievement, in his own words:

Childhood in a remote village

I was born and brought up in a small village called Vinavamangalam in Vellore district. My father Krishnan, who had studied up to the tenth standard, worked as a supervisor in a leather factory. My mother was a housewife. I am the eldest in the family and have two sisters and a brother. I studied up to the 8th standard in the village school and completed my schooling in a nearby town.

I was quite good at studies and always stood first. Coming from a poor family, I had only one ambition in life -- to get a job as fast as I could and help my father in running the family. My father got Rs 4,500 as salary and he had to take care of the education of four children and run the family, which you know is very difficult.

So, after my 10th standard, I joined a polytechnic college because I was told I would get a job the moment I passed out from there. When I passed out with 91 per cent, there was a chance for me to get entry to a government engineering college on merit. So I decided to join the Thanthai Periyar Government Engineering College to study mechanical engineering. My father supported my desire to study further.

Even while doing engineering, my ambition was still to get a job. If you look at my background, you will understand why I didn't have any big ambitions. Most of my friends in the village had studied only up to the 10th standard, and many did not even complete school. They worked as auto drivers or coolies or masons. I was the only one among my friends who went to college.

I understood the importance of education because of my parents. My father was the only one in his family to have completed school, so he knew the value of education. My parents saw to it that we children studied well.

In search of a job

Four days after I completed my engineering in 2000, I went to Bangalore in search of a job and I one without much difficulty. My salary was Rs 2,500 at a company that reconditioned tools.

It was in Bangalore that I started thinking about my village and my friends. I wondered sadly why none of them studied and worked in good companies. Because they had no education, they always remained poor. There was not enough money to buy even proper food. There was no opportunity there; the only place they could work was the tannery in the nearby town. If they didn't get work at the tannery, they worked as auto drivers or coolies. In short, there was no one in my village to guide the young generation.

I thought would I be able to help my villagers in any way?

Getting interested in the civil service examination

Till then, I had not even heard of something called the civil services examination. It was only after I went to Bangalore and saw the world that I was exposed to many things. I came to know that a collector in a small place could do a lot. At that moment, I decided that I wanted to be an IAS officer.

I resigned and went home to prepare for the examination. I never thought resigning was risky because I had the confidence and knew I would do well.

My father also supported me wholeheartedly. He had just got a bonus of Rs 6,500 and he gave me that money to buy study material. I sat in my village and studied from the notes I received by post from Chennai.

Failed attempts

In my first two attempts, I could not even clear the preliminary examination. I had no idea how to prepare for the exam, what subjects to opt for and how to study. There was nobody to guide me.

I had taken mechanical engineering as my main subject. That's when I met Uma Surya in Vellore. He was also preparing for the examination. He told me that if I took sociology as an option, it would be easy.

Even with sociology as the main subject, I failed in the third attempt. But I was not disappointed. I knew why I was failing. I didn't have proper guidance. I started reading newspapers only after I started preparing for the examination! So you can imagine from what kind of background I came from.

To Chennai for coaching

When I came to know about the government coaching centre (external link) in Chennai, I wrote the entrance examination and was selected. We were given accommodation and training.

Because I got tips from those who passed out, I passed the preliminary in my fourth attempt. We were given free accommodation and food only till we wrote the main examination. After that, we had to move out. I didn't want to go back to the village but staying in Chennai also was expensive.

I tried to get a job as an engineer but my efforts turned futile. I then decided to look for a part time job so that I would have time to study.

Working as a waiter in Chennai

I got a job as a billing clerk for computer billing in the canteen at Sathyam Cinemas. I also worked as the server during the interval. It never bothered me that I, a mechanical engineer, preparing for the civil services, had to work as a server. I had only one aim -- to stay on in Chennai to pass the examination.

Attending the interview in Delhi

After I got the job at the Sathyam Cinemas, I was called for the interview. As counselling was my hobby, a lot of questions were asked about counselling. I was not very fluent in English but I managed to convey whatever I wanted to. Perhaps I did not articulate well. I failed in the interview.

Preliminary again, the 5th time

Once again, I started from the beginning. Surprisingly, I failed in the preliminary itself. On analysis, I felt I did not concentrate on studies as I was working at Sathyam Cinemas.

I quit the job and joined a private firm to teach sociology to those preparing for the UPSC examinations. While I learnt the other subjects there, I taught sociology. Many friends of mine in Chennai helped me both financially and otherwise while I prepared for the examination.

Sixth attempt

I passed both the preliminary and the main in the sixth attempt but failed at the interview stage.

While preparing for the interview, I had written an examination to be an officer with the Intelligence Bureau and I was selected. I was in a dilemma whether to accept the job. I felt if I joined the IB, once again, my preparation to be an IAS officer would get affected. So, I decided not to join and started preparing for one last time.

Last attempt

I had to give the last preliminary just a few days after the previous interview. I was confused and scared. Finally, I decided to take the last chance and write the examination. Like I had hoped, I passed both the preliminary and the main.

The interview was in April, 2008 at Delhi. I was asked about Tamil Nadu, Kamaraj, Periyar, Tamil as a classical language, the link between politics and Tamil cinema etc. I was upset since I did not wish the interviewers at the start and they did not respond when I said thanks at the end. Both the incidents went on playing in my mind. I just prayed to God and walked back.

The day the results were out

I was extremely tense that day. I would know whether my dreams would be realised or not. I used to tell God, please let me pass if you feel I am worthy of it.

I went to a playground and sat there meditating for a while. Then, I started thinking what I should do if I passed and what I should do if I didn't.

I had only one dream for the last seven years and that was to be an IAS officer.

156th rank

Finally when the results came, I couldn't believe myself. I had secured the 156th rank out of more than 700 selected candidates. It's a top rank and I am sure to get into the IAS.

I felt like I had a won a war that had been going on for many years. I felt free and relieved.

The first thing I did was call my friends in Chennai and then my parents to convey the good news.

Warm welcome in the village

The reception I got in my village was unbelievable. All my friends, and the entire village, were waiting for me when I alighted from the bus. They garlanded me, burst crackers, played music and took me around the village on their shoulders. The entire village came to my house to wish me. That was when I saw unity among my villagers. It was a defining moment for me.

What I want to do

I worked really hard without losing faith in myself to realise my dream. My real work starts now. I want to try hard to eradicate poverty and spread the message of education to all people. Education is the best tool to eradicate poverty. I want Tamil Nadu.

What we learn from Jayaganesh

1)Not to lose hope- After failing five times he still sat for the exam the sixth time.

2)Tremendous self belief- Any ordinary person would have grabbed the chance to become become the IB offcier after the 5th attempt but Jayaganesh wanted to be a civil servant.

3) Passion- Jayaganesh did not hesitate to work as a waiter inspie of being a mech. engineer in his quest for the final goal.

These are my learnings please add your learnings in the comment column below:

Tuesday, June 3, 2008

Successful leaders don't start out asking, "What do I want to do?" They ask, "What needs to be done?" Then they ask, "Of those things that would make a difference, which are right for me?" They don't tackle things they aren't good at. They make sure other necessities get done, but not by them. Successful leaders make sure that they succeed! They are not afraid of strength in others. Andrew Carnegie wanted to put on his gravestone, "Here lies a man who knew how to put into his service more able men than he was himself."

2.Check Your Performance

Effective leaders check their performance. They write down, "What do I hope to achieve if I take on this assignment?" They put away their goals for six months and then come back and check their performance against goals. This way, they find out what they do well and what they do poorly. They also find out whether they picked the truly important things to do. I've seen a great many people who are exceedingly good at execution, but exceedingly poor at picking the important things. They are magnificent at getting the unimportant things done. They have an impressive record of achievement on trivial matters.

3.Mission Driven

Leaders communicate in the sense that people around them know what they are trying to do. They are purpose driven--yes, mission driven. They know how to establish a mission. And another thing, they know how to say no. The pressure on leaders to do 984 different things is unbearable, so the effective ones learn how to say no and stick with it. They don't suffocate themselves as a result. Too many leaders try to do a little bit of 25 things and get nothing done. They are very popular because they always say yes. But they get nothing done.

4.Creative Abandonment

A critical question for leaders is, "When do you stop pouring resources into things that have achieved their purpose?" The most dangerous traps for a leader are those near-successes where everybody says that if you just give it another big push it will go over the top. One tries it once. One tries it twice. One tries it a third time. But, by then it should be obvious this will be very hard to do. So, I always advise my friend Rick Warren, "Don't tell me what you're doing, Rick. Tell me what you stopped doing."

5.The Rise of the Modern Multinational

The modern multinational corporation was invented in 1859. Siemens invented it because the English Siemens company had grown faster than the German parent. Before the Second World War, IBM was a small maker, not of computers, but of adding machines. They had one branch in England, which was very typical for the era. In the 1920s, General Motors bought a German and English and then Australian automobile manufacturer. The first time somebody from Detroit actually visited the European subsidiaries was in 1950. A trip to Europe was a big trip. You were gone three months. I still remember the excitement when the then head of GM went to Europe in the 1920s to buy the European properties. He never went back.

6.21st Century Organizations

Let me give you one example. This happens to be a consulting firm headquartered in Boston. Each morning, between 8 A.M. and 9 A.M. Boston time, which is 5 A.M. in the morning here in California and 11 P.M. in Tokyo, the firm conducts a one-hour management meeting on the Internet. That would have been inconceivable a few years back when you couldn't have done it physically. And for a few years, I worked with this firm closely and I had rented a room in a nearby motel and put in a videoconferencing screen. Once a week, I participated in this Internet meeting and we could do it quite easily, successfully. As a result of which, that consulting firm is not organized around localities but around clients.

7.How To Lead a 21st Century Organization

Don't travel so much. Organize your travel. It is important that you see people and that you are seen by people maybe once or twice a year. Otherwise, don't travel. Make them come to see you. Use technology--it is cheaper than traveling. I don't know anybody who can work while traveling. Do you? The second thing to say is make sure that your subsidiaries and foreign offices take up the responsibility to keep you informed. So, ask them twice a year, "What activities do you need to report to me?" Also ask them, "What about my activity and my plans do you need to know from me?" The second question is just as important.

8.Prisoner of Your Own Organization

When you are the chief executive, you're the prisoner of your organization. The moment you're in the office, everybody comes to you and wants something, and it is useless to lock the door. They'll break in. So, you have to get outside the office. But still, that isn't traveling. That's being at home or having a secret office elsewhere. When you're alone, in your secret office, ask the question, "What needs to be done?" Develop your priorities and don't have more than two. I don't know anybody who can do three things at the same time and do them well. Do one task at a time or two tasks at a time. That's it. OK, two works better for most. Most people need the change of pace. But, when you are finished with two jobs or reach the point where it's futile, make the list again. Don't go back to priority three. At that point, it's obsolete.

9.How Organizations Fall Down

Make sure the people with whom you work understand your priorities. Where organizations fall down is when they have to guess at what the boss is working at, and they invariably guess wrong. So the CEO needs to say, "This is what I am focusing on." Then the CEO needs to ask of his associates, "What are you focusing on?" Ask your associates, "You put this on top of your priority list--why?" The reason may be the right one, but it may also be that this associate of yours is a salesman who persuades you that his priorities are correct when they are not. So, make sure that you understand your associates' priorities and make sure that after you have that conversation, you sit down and drop them a two-page note--"This is what I think we discussed. This is what I think we decided. This is what I think you committed yourself to within what time frame." Finally, ask them, "What do you expect from me as you seek to achieve your goals?"

10.The Transition from Entrepreneur to Large Company CEO

Again, let's start out discussing what not to do. Don't try to be somebody else. By now you have your style. This is how you get things done. Don't take on things you don't believe in and that you yourself are not good at. Learn to say no. Effective leaders match the objective needs of their company with the subjective competencies. As a result, they get an enormous amount of things done fast.

11.How Capable Leaders Blow It

One of the ablest men I've worked with, and this is a long time back, was Germany's last pre-World War II democratic chancellor, Dr. Heinrich Bruning. He had an incredible ability to see the heart of a problem. But he was very weak on financial matters. He should have delegated but he wasted endless hours on budgets and performed poorly. This was a terrible failing during a Depression and it led to Hitler. Never try to be an expert if you are not. Build on your strengths and find strong people to do the other necessary tasks.

12.The Danger Of Charisma

You know, I was the first one to talk about leadership 50 years ago, but there is too much talk, too much emphasis on it today and not enough on effectiveness. The only thing you can say about a leader is that a leader is somebody who has followers. The most charismatic leaders of the last century were called Hitler, Stalin, Mao and Mussolini. They were mis-leaders! Charismatic leadership by itself certainly is greatly overstated. Look, one of the most effective American presidents of the last 100 years was Harry Truman. He didn't have an ounce of charisma. Truman was as bland as a dead mackerel. Everybody who worked for him worshiped him because he was absolutely trustworthy. If Truman said no, it was no, and if he said yes, it was yes. And he didn't say no to one person and yes to the next one on the same issue. The other effective president of the last 100 years was Ronald Reagan. His great strength was not charisma, as is commonly thought, but that he knew exactly what he could do and what he could not do.

13.How To Reinvigorate People

Within organizations there are people who, typically in their 40s, hit a midlife crisis when they realize that they won't make it to the top or discover that they are not yet first-rate. This happens to engineers and accountants and technicians. The worst midlife crisis is that of physicians, as you know. They all have a severe midlife crisis. Basically, their work becomes awfully boring. Just imagine seeing nothing for 30 years but people with a skin rash. They have a midlife crisis, and that's when they take to the bottle. How do you save these people? Give them a parallel challenge. Without that, they'll soon take to drinking or to sleeping around. In a coeducational college, they sleep around and drink. The two things are not incompatible, alas! Encourage people facing a midlife crisis to apply their skills in the non-profit sector.

14.Character Development

We have talked a lot about executive development. We have been mostly talking about developing people's strength and giving them experiences. Character is not developed that way. That is developed inside and not outside. I think churches and synagogues and the 12-step recovery programs are the main development agents of character today.

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